L3 Syllabus - Exam Topics 2015
Accounting 2015
1) ASC 260
A) Basic EPS
i) Effect of Stock Compensation
B) Diluted EPS
i) Awards Outstanding for Part of a Period Only
ii) Calculation of Tax Benefit Shares
iii) ISOs
iv) NSOs
v) RSAs/RSUs
vi) SARs
vii) Treatment of Unamortized Expense
C) EPS
i) Two-class Method Required for Dividends Paid on Unvested Awards
2) ASC 505-50
A) Awards Granted to Non-Employees
i) Measurement Date
ii) Measurement of Compensation Cost
iii) Recognition of Compensation Cost
3) Disclosures
4) ESPP
A) Automatic Rollover Provisions
B) Fair Value
C) Grant Date
D) Increases in Contribution Rates
E) Look-Back Feature
F) Non-Qualified Plans
G) Option-Like Features
H) Period Over Which Expense is Accrued
I) Purchase Discount
J) Share Shortfall
K) Treatment of Forfeitures
L) Treatment of Withdrawals
5) Forfeiture Rate
A) Adjusting to Actual Outcome
B) Changes in Estimates
i) Dynamic Method
ii) Static Method
C) Initial Estimate
D) Static vs. Dynamic Methods
6) Grants to Employees
A) Definition of Employee
B) Measurement Date
i) Communication of Grants
ii) Definition of Performance Conditions
iii) General Understanding
iv) Grants Contingent on Shareholder Approval
7) International
A) IFRS 2
i) Black-Scholes vs. Binomial
ii) Country-Specific Valuation Inputs and Forfeiture Assumptions
iii) Liability Treatment for Share Withholding
iv) Non-compensatory Plans
v) Required Attribution Method for Awards with Graded Vesting
vi) Tax Accounting
vii) Treatment of Grants to Non-employees
B) Role of the IASB
8) Liability Treatment
A) Adjustments to Fair Value
B) Cash Settlement Triggered by Event Outside Company Control
C) Options Exercisable after Termination
D) Repurchase Obligations
E) Required Cash Settlements
F) Tandem Awards
9) Market Condition Awards
A) Expense Recognition for
Changes in Quantity
B) Expense Recognition for Changes in Service Period
10) Measurement of Compensation Costs
A) Cash-settled RSUs; Phantom Stock
B) Cash-Settled SARs
C) Cheap Stock Issues
D) Dividends on RSAs/RSUs
F) Net, Pyramid, and Swap Exercises
G) Non-forfeiture of Dividend Payments
H) Non-payment of Dividends on RSUs
I) RSAs/RSUs
J) Shares Tendered to Cover Tax Withholding
K) Stock Options
L) Stock-Settled SARs
M) Vesting Contingent Upon Market Conditions
N) Vesting Contingent Upon Service/Performance Conditions
11) Modifications
A) Additional Compensation Cost
B) Award Classification Changes
C) Awards Cancelled for No Consideration
D) Cash Settlement of Awards
E) Change in Employment Status (with Modification of Award)
F) Definition of Modification
G) Incremental Cost Compared to Proxy Disclosure
H) Measurement Date
I) Non-Price Related Changes
J) Repricing
K) Restructuring/Purchase Business Combination
L) Treatment of Cancelled Option
M) Type I - Probable to Probable
N) Type III - Improbable to Probable
12) Performance Condition Awards
A) Discretion for Payouts
B) Expense Recognition for Changes in Fair Value
C) Expense Recognition for Changes in Quantity
D) Performance Metrics Outside Control of Company (CIC, IPO, Regulatory Approval)
E) Retirement Eligible Employees
13) Recognition of Compensation Cost
A) Arrangements Granted to Employees
B) Cancellation/Expiration
i) Vested Options
C) Change in Employment Status (No Modification of Awards)
D) Derived Service Period
E) Explicit Service Period
F) Implicit Service Period
G) Liability Awards
H) Non-Substantive Service Conditions
I) Service Inception Date
J) Straight-line and Accelerated Accrual
14) Role of FASB
15) Staff Accounting Bulletin No. 107
A) Valuation
i) Changing Valuation Models
ii) Determining Expected Term
iii) Simplified Expected Term Formula
iv) Use of Historical Volatility
v) Use of Implied Volatility
vi) Use of Peer Volatility
16) Tax Accounting
A) Nonqualified Arrangements
i) APIC
ii) DTAs
iii) Shortfalls
B) Qualified Arrangements
17) Valuation by Privately Held Companies
18) Valuation Factors
A) Equity Treatment
i) Fair Value Not Adjusted for Changes in Model Inputs
B) Expected Term
C) Impact on Value
i) Dividend Yield
ii) Expected Term
iii) Interest Rate
iv) Volatility
D) Interest Rate Selection
E) Post-Vesting Termination
F) Required Factors
G) Suboptimal Exercise Factor
H) Volatility
I) Volatility for Private Companies
19) Valuation Models
A) Black-Scholes
B) Lattice Models
C) Market Value of Options
D) Monte Carlo Simulations
L3 Syllabus - Exam Topics 2015
Corporate and Securities Law 2015
1) Blue Sky Laws
A) General Understanding
2) Corporate Governance
A) Clawbacks
B) Directors and Officers
i) Conflicts of Interest
C) Shareholder Concerns and Considerations
i) Say on Pay
ii) When is Plan Approval Required?
D) Stock Market Regulations
i) Requirements
ii) Street Name vs. Registered Shareholders
(a) Broker Voting
3) Corporate Law
A) Authorization to Grant Equity
i) Board of Directors vs. Committee
B) Board of Directors
i) Independence Rules
(a) Compensation Committee Qualification
C) Characteristics of Corporate Entities
i) Public vs. Private Corporations
F) Dividends
G) Stock Issuance
H) Stock Splits
I) Voting Rights
i) RSAs vs. RSUs
4) Divorce
A) Basic Technical Issues Upon Transfer
i) Practical Legal Issues
B) DOMA
5) Federal Reserve Act
A) Fundamentals of Regulation T
i) Broker-Assisted Option Exercises - Margin Rules
6) Plan Provisions
A) Plan Design Considerations
i) Amendments
(a) Maintaining compliance, required shareholder approval
ii) Basic Corporate Governance
7) Sarbanes-Oxley Act of 2002
A) General Understanding
8) Securities Act of 1933
A) Form S-8
i) Effect of Delinquent Annual or Quarterly Filings
ii) Prospectus
iii) Technical Requirements
iv) Uses and Basic Filing Obligations
(a) Coverage for Gifted/Transferred Stock
(b) Information Dissemination
(c) Permissible Offerees of Securities Registered
(d) Registering Resales on Form S-8
v) Which Issuers May Use Form S-8
(a) Form S-8 Availability
B) Regulation D
C) Rule 144
i) Affiliate
ii) Control Securities
iii) Form 144
iv) Holding Period
(a) Calculation
(b) Non-Recourse Loans
(c) Other Requirements
v) Restricted Securities
vi) Use and Limitations
D) Rule 701
i) Application to Post IPO Sales
ii) General Understanding
iii) Resale Provisions of Affiliates
iv) Resale Provisions of Non-Affiliates
E) Securities Registration
i) Award Types Not Requiring Registration
9) Securities Exchange Act of 1934
A) Form 8-K
i) Trigger Events and Filing Deadline
B) General Understanding of Insider Trading
i) Trading Windows and Blackout Periods
C) General Understanding of Insider Trading Under Rule 10b-5
i) Basic Rules and Issues
D) Regulation 13D and 13G
i) Beneficial Ownership Determination
E) Regulation S-K
i) Annual Compensation
(a) Compensation of Directors
(b) Determining NEOs
ii) Grants of Plan Based Awards
iii) Item 405
(a) 16(a) Late Filing Consequences
iv) Option Exercises and Stock Vested
v) Option Repricing Information
(a) Stockholder Approval
vi) Outstanding Equity Awards at Fiscal Year End
vii) Plan Disclosures
(a) Non-Approved Plans
viii) Summary Compensation Table & CD&A
(a) Emerging Growth Companies
F) Rule 10b5-1
i) Trading Plans
G) Section 12
i) Reporting Thresholds
H) Section 16
i) Persons subject to Section 16
I) Section 16 Reporting Requirements and Matching Exemptions
i) Adjustment of Ownership for ESPP
ii) Approval Requirements
iii) Cancellation and Regrant
iv) Cash Settlement of an SAR
v) Delivery of Previously Owned Stock in Payment of Option Exercise Price
vi) Exemptions
vii) Formula / Director Plans - Amount, Price, and Timing of Formula Awards
J) Section 16(a) Reporting
i) Equity Award Expiration or Cancellation
ii) Equity Grants
iii) Exercise
iv) Form 3, Form 4, Form 5
v) General Reporting Guidelines
vi) Post-Termination Reporting
vii) Restricted Stock (Awards & Units) — Vest/Release
viii) Transfer
K) Section 16(b) Short-Swing Profits
i) Calculation of Six-Month Period
ii) Exemptions
L) Terminology
i) Annual and Special Meetings of Shareholders
ii) Record Date
10) Securities Law - General Understanding
A) General Understanding of Multiple Classes of Stock
i) Preferred, Convertible, Options on Different Classes, etc.
B) International Issues
C) Par Value
11)Tender Offer Regulation and Option Repricing
A) Tender Offer Rules
i) Option Exchange Program
(a) Plan Provisions Prohibiting or Allowing
(b) Stockholder Approval Requirements
(c) Executive Officer Participation
(d) Timing (20 day)
(e) Communication Restrictions
(f) Schedule TO
(g) Proxy Disclosure
(h) Stock Exchange Requirements
(i) Institutional Shareholders
12) Transfer Agent
A) Issuance Authority
B) Reserves
L3 Syllabus - Exam Topics 2015
Equity Plan Design, Analysis and Administration 2015
1) Characteristics of Equity Awards
A) ESPP Features
i) Enrollment Date
ii) Enrollment Process
iii) General Knowledge & Understanding
iv) Offering Period
v) Price Determination
vi) Purchase Date
vii) Purchase Period
B) Grants/Awards
i) Calculating Vesting
ii) Definition of an Equity Grant
iii) Definition of Vesting
iv) Grant Term/Expiration
C) Performance Awards
i) Administration Processes
D) Phantom Stock
i) Features of Phantom Stock
E) Restricted Stock Plans
i) Administration Processes
ii) Advantages and Disadvantages
iii) Issuance of Shares - RSAs
iv) Issuance of Shares - RSUs
v) Methods of Tax Payment
vi) Par Value Award Consideration
vii) Purchase Price
viii) Repurchase Upon Termination
ix) Restricted Stock Awards
x) Restricted Stock Units
F) Stock Appreciation Rights
i) Basic Characteristics - SARs
ii) Basic Characteristics - Tandem SARs
iii) Payout Amount - Cash
iv) Payout Amount - Stock
G) Stock Options
i) Defintion of Exercise
2) External Considerations
A) Shareholder Concerns and Considerations
i) Plan Features
(a) Dilution
(b) Repricing
(c) Value Transfer
3) Governing and Supporting Documents
A) Collateral (Auxiliary) Documents
i) Prospectus
(a) Distribution Methods
B) Grant Agreement
i) Definition of a Grant Agreement
ii) Required Elements
iii) Vesting Provisions
C) Grant Procedures
i) Internal Approval & Controls
D) Notice of Exercise
E) Plan Provisions
i) Administration of the Plan
ii) Amendments
iii) Change in Control Provisions
iv) Death
v) Disability/LOA
vi) Dividends and Equivalent Rights
vii) Duration of Plan
viii) Early Exercise Provisions
ix) Eligible Employees - ESPP
x) Eligible Employees - Options
xi) Evergreen
xii) Fair Market Value Definition
xiii) Merger and Acquisition Application
xiv) Minimum Exercise Price
xv) Performance Measures
xvi) Repricing Programs
xvii) Retirement
xviii)Severance - Limitations in the Document
xix) Share Reserves
xx) Splits
xxi) Termination
xxii) Transferability
(a) Divorce
(b) Transferable Stock Options
4) Planning
A) Acceptance Requirements
B) Amount of Securities Issued
C) Basic ESPP Provisions
i) Dilution
D) Choosing an Equity Plan
E) Domestic Data Protection
F) International Planning Considerations
i) Data Protection
ii) Employment Laws
iii) Exchange Controls
iv) Implementing Global Stock Plans
G) Plan Design Considerations
i) Grant Perspective
H) Plan Objectives
I) Policies and Procedures
i) Purpose and Objectives
ii) Sarbanes-Oxley
J) Understanding When Plan Provisions Govern
K) Vesting Requirements
5) Understanding of Transactional Functions
A) Exercise Processes
i) Same-Day-Sale Processes
B) Exercising Methods
i) Broker-Assisted Exercises (STC, SDS)
ii) Cash (Also Known as Exercise and Hold)
iii) Net Exercise
iv) Stock Swaps
(a) Procedures and Mechanics
L3 Syllabus - Exam Topics 2015
Taxation 2015
1) Basics of Taxation
A) Terms and Definitions
i) Capital Gain/Loss
ii) Estimated Tax Payments
iii) Ordinary Income
2) Evergreen Provisions
A) Application to ISOs and ESPPs
i) Maximum Share Limits
3) International
A) IRC Section 423 - ESPPs
i) Plan Considerations
B) Mobile Employee Tax Treatment
C) Options, Restricted Stock and Units
i) Plan Considerations
D) Recharge Arrangements
E) Tax Withholding (Non Mobile Employees)
4) IRC Section 83
A) Making 83(b) Elections
i) Benefits and Risks
ii) Election Procedures
5) IRC Section 162(m) - Certain Excess Employee Remuneration
A) Design
B) Employer Tax Treatment
i) Performance Based Compensation
C) Full-Value Awards
D) Repricing
E) Stock Options/SARs
6) IRC Section 280G – Golden Parachute Payments
7) IRC Section 409A
A) Compliance / Noncompliance Consequences
B) Deferral Elections
i) Non-performance Awards
ii) Performance Awards
C) Exemptions to 409A
D) General Understanding
E) Short-term deferrals
8) IRC Section 422 - ISOs
A) Amendments and/or Modifications
i) Maintaining ISO Status
(a) Changes in Employment Status
(b) Plan or Grant Modifications
B) Employee Tax Treatment
i) Alternative Minimum Tax
ii) Dispositions
iii) Early Exercise
iv) Holding Period
(a) Disqualified Versus Qualified
C) Employer Tax Treatment
i) Dispositions
D) Loans and Promissory Notes
E) Special Circumstances
i) Mergers and Consolidations
ii) Repricing
F) Statutory Requirements
i) Eligibility
ii) Grant and Plan Requirements
9) IRC Section 423 - ESPPs
A) Employee Tax Treatment
i) Dispositions
B) Employer Tax Treatment
i) Deduction and Reporting Requirements
C) Statutory Requirements
i) Employee Eligibility
ii) Plan Requirements
10) IRC Section 6039
A) Reporting and Penalties
B) Requirements and Tracking
i) Application to ESPPs
ii) Application to ISOs
11) Loans and Promissory Notes
12) Non IRC Section 423 - ESPPs
A) Employee Tax Treatment
B) Employer Tax Treatment
i) General Provisions
13) NSOs
A) Employee Tax Treatment
i) Capital Gain/Loss Basis
ii) Early Exercise
iii) Recognition of Income – Amount and Timing
B) Employer Tax Treatment
i) Deduction and Reporting Requirements
C) Special Circumstances
i) Gifting and Transferability
D) Withholding
14) Performance Awards
A) Corporate Tax Deduction
B) Global Tax Considerations
C) Income and Withholding
D) Pro-rata Payouts upon Retirement
15) Restricted Stock
A) Dividends and Dividend Equivalents
B) Employee Tax Treatment
i) Income and Withholding
ii) Retirement
iii) Section 83(b) Election
C) Employer Tax Treatment
i) Corporate Tax Deductions
ii) Withholding Obligations
D) Restricted Stock Purchases and Direct Stock Purchases
i) Non-lapse Restrictions
16) Special Circumstances
A) Death
i) IRC Section 422 - ISOs
ii) IRC Section 423 - ESPPs
iii) Nonqualified Grants
B) Divorce
i) IRC Section 422 - ISOs
ii) IRC Section 423 - ESPPs
iii) Nonqualified Grants
C) LOA
i) IRC Section 422 - ISOs
ii) IRC Section 423 - ESPPs
iii) Nonqualified Grants
17) SARs
A) Employee Tax Treatment
B) Employer Tax Treatment
18) Stock Swaps
A) ISO
B) NSO
19) Technical Issues
A) Cost Basis Reporting
i) Form 1099-B
B) Withholding
i) Non-Employees and Directors
ii) Tax Deposit Timing